The underlying loan agreements were executed in Chicago, Illinois, on April 29, 1987. That same day, Sheldon Modansky and Ajayem Investors executed and delivered their guaranty agreements to Continental in Chicago. Aaron Modansky executed and delivered his guaranty approximately one week later. All three guaranties provide that they are to be governed by Illinois law.

On November 4, 1988, the four corporate borrowers filed for bankruptcy in the United States Bankruptcy Court for the Southern District of New York. By filing for bankruptcy, the borrowers were in default under the terms of the loan agreements. Consequently, the entire amount loaned to the borrowers became immediately due and owing to Continental. When Continental did not receive payment from the borrowers, it made a demand upon the guarantors. Failing to obtain reimbursement from the guarantors, Continental then filed this diversity action to enforce the guaranty agreements. As of March 22, 1990, the date of filing, the amount payable to Continental totaled $ 9,796,574.89 in principal and interest.

DISCUSSION

Defendants move to transfer this case to the United States District Court for the Southern District of New York. To prevail on a motion to transfer under § 1404(a), defendants must establish that (1) venue is proper in the transferor forum, (2) venue is proper in the transferee forum, and (3) a transfer is for the convenience of the parties and witnesses, and the interest of justice. Trademasters Int'l, Inc. v. Borer, 687 F. Supp. 434, 435 (N.D. Ill. 1988).

With respect to the convenience of the witnesses, both sides contend that they intend to call several witnesses who will be inconvenienced if forced to testify in another state. In the context of a motion to transfer, the court must consider not only the number of potential witnesses residing in the transferor and transferee districts, but the nature and quality of their testimony as well. Trademasters Int'l, Inc., 687 F. Supp. at 436. Although Continental has not specified the number of potential witnesses residing in Illinois or the nature of their testimony, it states that all of its material witnesses live and work in Illinois. Defendants have identified only four witnesses who would be inconvenienced by a Chicago trial. Defendants state that these witnesses are not amenable to process in Illinois. As agents of the defendants, however, these witnesses would appear to be within defendants' control. And, defendants have not shown that the witnesses would not appear in Illinois voluntarily. Based on the evidence presented by defendants, the court fails to see a clear balance of inconvenience justifying a transfer. Any convenience gained by defendants' witnesses would be at the expense of Continental's witnesses. The convenience of the witnesses, therefore, does not weigh heavily in favor of transferring this case to New York.

Defendants simply have not provided any compelling reason to upset Continental's choice of forum. Aside from the fact that the defendants and some of their witnesses reside in New York, the Southern District of New York has relatively little connection to this litigation. The loan and guaranty agreements were negotiated, executed, and delivered in Chicago -- though negotiations were also conducted in New York. The loan was disbursed from Chicago and it was to be repaid to Continental in Chicago.

Defendants claim that the interest of justice demands a transfer because the borrowers' bankruptcy cases are pending in New York. Considering all of the factors which militate against a transfer, the pendency of these bankruptcy cases in another district will not support defendants' motion. It is extremely unlikely that this case would ever be joined with the bankruptcy cases. Although there may be some overlap in discovery between this case and the bankruptcy proceedings, the cases are not so closely aligned as to warrant coordination of discovery. The cases involve different issues and there is no serious threat of duplicative litigation or inconsistent judgments. For purposes of resolving the claims arising from the guaranty agreements, this court is not persuaded that a New York trial is in the interest of justice.

CONCLUSION

For the foregoing reasons, the court denies defendants' motion to transfer.

IT IS SO ORDERED.

Our website includes the main text of the court's opinion but does not include the
docket number, case citation or footnotes. Upon purchase, docket numbers and/or
citations allow you to research a case further or to use a case in a legal proceeding.
Footnotes (if any) include details of the court's decision.

Buy This Entire Record For
$7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.